RXR has lost control of one of the office buildings it had deemed worth holding on to.
Barings, a subsidiary of Massachusetts Mutual Life Insurance, purchased RXR’s 340 Madison Ave. at auction Thursday for about $161 million, according to property and court records. MassMutual had sued to foreclose on the property in May, alleging that RXR had defaulted on a $315 million loan the lender provided in 2011 for the 22-story tower.
A court-appointed receiver was tasked with selling the property in December and scheduled an auction for 3:30 p.m. Thursday, court records show. Although “at least three prospective bidders” contacted the receiver leading up to the auction, the lender was ultimately “the only qualified bidder to attend” and won with its opening bid of roughly $161 million, according to court records.
A representative for RXR declined to comment on the auction, and a representative for Barings did not immediately respond to a request for comment.
RXR, led by CEO and Chairman Scott Rechler, launched an initiative it dubbed “Project Kodak” in the wake of the pandemic and the difficult new realities facing the city’s office market. The goal was to sort its portfolio into two types of buildings: “film” properties that were obsolete and “digital” properties that were worth keeping. It had put 340 Madison Ave. in the “digital” category, with David Garten, a senior adviser to RXR, describing it to Crain’s at the time of the foreclosure lawsuit as a “high-quality building with a broken capital structure.”
The property, located between East 43rd and East 44th streets, dates back to 1928 and spans 760,000 square feet with estimated asking rents of $68 to $83 per square foot, according to commercial real estate database CoStar. It is 60.6% occupied, CoStar says.
RXR is also having difficulties at the Helmsley Building in Midtown, where it is in the middle of a foreclosure fight. It has been having better luck at 1285 Sixth Ave., where it recently inked a pair of huge deals: a roughly 430,000-square-foot lease with law firm Ropes & Gray and a roughly 150,000-square-foot sublease with Japanese financial firm Mizuho Financial Group.
